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Hope for breakthrough in US fiscal showdown

Oct 11, 2013

WASHINGTON - A glimmer of hope for a breakthrough flickered Friday in the fiscal impasse which has crippled Washington and threatened serious damage to the global economy.

After more than a week of deadlock, something positive emerged Thursday when Republicans offered President Barack Obama a short term extension of the US government's borrowing authority, so as to stave off a possible debt default.

In the process, they spurred a bumper day on Wall Street and Asia reacted well Friday, too. Shares in Tokyo rose 1.48 per cent, and stocks were also up in Sydney, Seoul and Hong Kong and elsewhere.

Signs of movement coincided with a new poll showing Americans have developed a sharply negative view of congressional Republicans during a crisis which has also partially shuttered the US government since October 1.

Republican leaders presented their plan to President Barack Obama at the White House - and in a departure from recent bad tempered encounters, both sides described the meeting as useful and constructive.

The White House said Obama would be open to the Republican proposal for a six week extension to the $16.7 trillion debt ceiling - though would prefer longer.

The sticking point appears to lie in the Republican Party's request for Obama to open talks on a budget deal as a condition for reopening the government.

Obama says he will only discuss long-term budget issues once the government returns to work and hundreds of thousands of federal employees are back at their desks.

After 90 minutes of talks at the White House, House Republican Party second in command Eric Cantor offered an unusually upbeat assessment to reporters.

"It was a very useful meeting, we had a constructive conversation," Cantor said, adding that both sides would consider their positions and get back together to talk into the night leading from Thursday into Friday.

The White House, sensing victory and keen to drive a hard bargain, was more measured, making clear that Obama was still seeking a deal that would both reopen the government and extend the debt ceiling.

"After a discussion about potential paths forward, no specific determination was made," a statement said.

"The President looks forward to making continued progress with members on both sides of the aisle."